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New low for Russian currency

Few bright spots in Russian economy, bank analyst says.

By Daniel J. Graeber

MOSCOW, Nov. 7 (UPI) -- It's becoming more difficult to find good news for the Russian economy, an analyst said Friday after the national currency crashed to a new low.

By midday in Moscow, the currency hit bottom with trade at 45.7 rubles to the U.S. dollar, besting the previous low by 8 percent.

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Dmitry Polevoy, a chief Russian analyst at ING, told Russian news agency ITAR-Tass there were few bright spots for the nation's economy.

"It is increasingly difficult to find augments to describe the current situation, when you look at market figures every morning," he said.

The Russian economy is burdened by Western sanctions targeting Russian energy companies. With oil trading below the $100 mark, sanctions were blamed for record inflation and a struggling ruble.

A report this week from the European Commission said the Russian economy was entering a period of stagflation.

"Geopolitical tensions over the situation in Ukraine, including sanctions, have exacerbated existing structural bottlenecks linked to an exhausted growth model largely centered on the export of natural resources," the report said. "This is taking a heavy toll on the growth outlook."

The EC said there was a small recovery in the Russian investment climate in the latter half of 2013, though that evaporated in 2014. Uncertainties over Russia's reaction to geopolitical concerns over a Ukraine moving closer to Western powers are making would-be investors worried, the commission's report said.

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Futures trading show the exchange rate for the ruble at 48.9 per U.S. dollar by December and 50 rubles by August 2015.

Maxin Korovin, an analyst at VTB Capital, told the Russian news agency geopolitical tensions can only partially explain the collapse.

"It is mainly caused by the population's increased demand for foreign currency," he said.

An assessment from the World Bank finds sanctions are taking a dramatic toll on a Russian economy that depends heavily on oil and gas exports for revenue.

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